The new systems were expected to save the federal treasury $21 billion over 10 years by cutting the improper payments. But a 50-page report released last week by the Government Accountability Office chided the CMS for its apparent sloth in deploying the two systems—the Integrated Data Repository and the One Program Integrity initiative.
“The GAO is not off base,” said Barry Johnson, president of Salt Lake City-based Healthcare Insight, a private firm that does pre-payment insurance claims reviews. CMS officials “talk about doing all these things and you get excited for change,” he said. “And here we are a year and half later, and they’ve trained 40 people.”
GAO auditors said that only 42 of 639 contractors who were supposed to be trained on the program by 2010 actually had been, and that the state-based Medicaid data that was supposed to enter the systems in 2010 is now on track for entry in 2014. And since no benchmarks for performance had been set, it was impossible to tell whether the programs had saved any money, let alone some fraction of the $21 billion.
In written remarks and testimony to a congressional committee, Joel Willemssen—the managing director of information technology for the GAO—went so far as to compare the CMS’ current efforts to centralize its Medicaid claims to the Medicare Transaction System of the 1990s.
The CMS spent more than $100 million on the transaction system in the mid-90s, after saying it would cost only $37 million. Congress voted to cancel all future funding, causing the CMS to permanently shelve the program, after the GAO predicted the ultimate price tag could rise to more than $1 billion (Sept. 22, 1997, p. 26).
“There are similarities and there are differences,” Willemssen said, comparing the failure of the transaction system with the CMS’ current programs, in July 12 testimony before the Senate Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security. “One area of similarity is some level of underestimation of complexity going into this.”
For example, the Integrated Data Repository was intended to house all claims for Medicare and Medicaid in a single data-warehouse so that trend-analysis tools in the One Program Integrity initiative can detect potential fraud.
However, the CMS discovered that the states store and transmit their individual Medicaid data in a hodgepodge of formats that made the simple centralization as originally envisioned impossible, said Dr. Peter Budetti, CMS deputy administrator and the director of program integrity.
Budetti, who was summoned to the same July 12 Senate subcommittee hearing to explain the CMS’ progress on the programs, noted in his defense that the states were not under any requirement to submit their information in any single format.
Budetti reported that a related $400 million CMS initiative started in 2009 called the Medicaid and Children’s Health Insurance Program Business Information and Solutions program is intended to centralize expedited access to state Medicaid data for all 50 states by 2014—the program Willemssen compared to the Medicare Transaction System of the 1990s.
Budetti also testified that all 639 people affiliated with the CMS’ Zone Program Integrity Contractors, which look for fraud in the seven divisions of the U.S., will be trained to use the One Program Integrity program to root out fraud by the end of 2011. He also noted that the long-awaited effort to expand the Recovery Audit Contractor program to Medicaid will be “in place” by Sept. 21.
In further defense of the CMS’ performance in fighting improper payments, Budetti touted the recently announced “predictive modeling” system, which was mandated in the Patient Protection and Affordable Care Act and went operationally online within nine months.
The program—which was not audited or commented on by the GAO—employs defense contractor Northrop Grumman to use software originally designed for Verizon to scan all 4.4 million daily Medicare claims in real time and detect signs of fraud. It is expected to cost about $77 million over the four-year life of the initial contract.
The program went live July 1 and had already found a large volume of questionable claims, although no payments had yet been withheld because the CMS was still doing trends analysis to ensure legitimate payments were not being flagged.
Lewis Morris, chief counsel to HHS Inspector General Daniel Levinson, told the Senate subcommittee during the same hearing that technology alone will not stop the rising tide of fraud. He said human intelligence was still vital to the fraud-detection system, especially in instances where investigators are looking for medically unnecessarily treatments.
“Technology can be a powerful weapon in the fight against fraud, but it is not a silver bullet,” Morris said.